Support during Lockdown : An update on Coronavirus Business Loan Schemes

29/04/2020

The Chancellor has announced a new loan scheme following increasing pressure that support was not getting to businesses quick enough. Below is a summary of the scheme named the Bounce Back Loan together with a brief update on the Coronavirus Business Interruption Loan Scheme and The Future Fund, another scheme the government will be launching soon.

Bounce Back Loan

The government has announced the new scheme will launch 4th May to support small and medium sized businesses with loans between £2,000 and the lower of £50,000 or 25% of their turnover.

As with the Coronavirus Business Interruption Loan Scheme, there wont be any fees or interest to pay for the first 12 months. The government will guarantee 100% of the loan and there will be no repayments due for the first 12 months. The government is working with lenders to agree a low rate of interest for the remaining period of the loan which can be up to 6 years. Businesses will need to demonstrate they were viable prior to the crisis but will no longer need to demonstrate they will be viable after.

More information on how to apply will follow shortly with indications the scheme will require filing in a two-page self-certification form online.

Coronavirus Business Interruption Loan Scheme (CBILS) Update

The features of the scheme have evolved since it was announced 23rd March so below is a updated summary:

  • Available to businesses with an annual turnover of up to £45m
  • Funding up to £5m as a loan, overdraft, invoice finance and asset finance for up to 6 years (3 years on overdrafts and invoice finance)
  • The government will provide lenders with a guarantee for 80% of the borrowing and will cover any fees and the first 12 months interest
  • No personal guarantees on facilities under £250,000
  • There are now over 50 accredited lenders

Future Fund

The government has announced another scheme which will be available from May called The Future Fund. The scheme will provide government loans of £125,000 to £5m to UK-based innovative companies subject to at least an equal amount matched from private investors. The funding will be in the form of a convertible loan and intended for businesses that rely on equity investment and unable to access the CBILS. Interest is charged on the loan at a minimum rate of 8% paid on the maturity of loan up to a maximum term of 36 months. If the loan is not repaid it will convert into the most senior class of shares in the company.

Full criteria will be published soon and we will be releasing further information on this shortly.

Nick Cross

This article was written by Nick Cross

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